Litigation: Managing discovery in asymmetrical lawsuits

This is the third article in a series about managing asymmetrical litigation. The first article described these David versus Goliath situations and some of the unique issues that they present, and the second article discussed strategies for avoiding discovery through early motion practice.

One of the main themes of this series of articles is managing asymmetrical litigation by avoiding unnecessary expenses and focusing on substantive resolution. The previous article in this series discussed strategies for avoiding the costs of discovery entirely through early dispositive motion practice. Where such motions do not end the action, it is critical to implement strategies for structuring discovery to minimize its costs when it cannot be avoided altogether.

Under Rules 16 and 26 of the Federal Rules of Civil Procedure, parties are required to meet and confer on a variety of topics, including the scope and direction of fact discovery, in advance of the initial case management conference. The parties then submit a joint report (Joint Case Management Report or JCMR) to the court identifying areas of agreement and disagreement on these issues. As such negotiations are typically held early in a case before defendants have had time to develop their defense strategies or have had an opportunity to speak with their counsel extensively regarding discovery issues, defendants typically wait for plaintiffs to provide them with a cookie cutter draft of the JCMR and then sign off on the boilerplate provisions without giving them much thought. This is a big mistake. The JCMR and the court’s subsequent discovery order will shape the structure of discovery for the rest of the case, and should be given careful thought.

Early and frequent discussions between a defendant and its counsel are essential so that the JCMR does not give the smaller entity an advantage in the action. The JCMR should set forth the parties’ views on which discovery may be needed, when discovery should be completed and whether discovery should be conducted in phases or limited to focus on particular issues. While the discovery section of the report is often just a high-level listing of claims and defenses, this is an opportunity to attempt to have certain topics excluded from fact discovery or deferred until later stages.

For example, if a particularly strong dispositive defense is available, defendants should forcefully request phased discovery to address that defense before discovery is conducted in other areas. Moreover, if defendants anticipate that plaintiff will seek discovery into certain areas that are unlikely to yield relevant information but will cause defendants to incur significant expenses or inconvenience, it is best to try to convince the court to preclude discovery through the JCMR, instead of through motion practice later in the case. Therefore, if a patent infringement plaintiff asserting a high-level business method patent seeks extensive document production regarding the irrelevant technical specifications of accused products, argue to the court in the JCMR that production of these documents is an unnecessary expense on all parties that should be deferred until good cause is shown by the plaintiff.

Defendants also should consider the possibility of stipulating or conceding certain factual issues in exchange for avoiding or severely limiting discovery on those issues. For example, in a patent infringement case where there are very strong prior art invalidity defenses or no credible non-infringement defense to certain particular elements of asserted claims, conceding that an accused product operates in a certain manner may be a way to avoid the expense of broad discovery into the design of the accused products. This will allow for a straightforward path to early and inexpensive resolution of validity, or non-infringement based on other elements of the asserted claims.

Another approach not often employed by defendants is to seek a fact discovery period that is as short as practically possible. This approach will allow defendants to get through discovery as quickly as possible and be able to focus on dispositive motion practice. At the same time, smaller-sized plaintiffs hoping to extract a quick settlement will privately cringe at being forced to quickly conduct discovery, but often will be forced to agree to such requests to avoid signaling weakness to defendants and the court.

It also will limit a plaintiff’s opportunity to fish around and create needless and costly discovery fights where plaintiffs are unwilling to invest significant resources in discovery. Indeed, this shortened discovery period may even cause them to under develop their case. This strategy, therefore, is a win-win for the Goliath-sized defendant; minimize discovery costs, get to the dispositive motion practice more quickly and put pressure on the plaintiff, which has significantly fewer resources and desire to aggressively pursue its case.

Because the single-largest cost of litigation is discovery of electronically stored information (ESI), it is critical that the JCMR address—and attempt to limit—a defendant’s ESI obligations. In particular, production of email and archived documents often is especially expensive (and, therefore, a favorite target of David-sized plaintiffs in asymmetrical litigation), while at the same time unlikely to yield relevant information beyond that available from more readily collected and produced documents. Defendants can significantly reduce document discovery costs by using the JCMR to exclude such documents from discovery or, at least, require the plaintiff to first make a showing of the need for production of these materials. Courts often will agree, at a minimum, to exclude certain categories of ESI from the initial document productions, upon a showing of good cause.

With these strategies, the Goliath-sized defendant can structure the discovery gauntlet in a way that will save resources for substantive resolution and present the company’s CEO with a litigation budget that will not lead to an automatic nuisance value settlement. The next article in this series will discuss techniques and practices to minimize the cost of collecting and producing documents and to try to avoid or defuse non-substantive discovery disputes.